Peer Pressure in an Agency Relationship

John Barron () and Kathy Paulson Gjerde

Journal of Labor Economics, 1997, vol. 15, issue 2, 234-54

Abstract: The authors investigate the role of peer pressure in influencing the optimal incentive scheme offered to workers engaged in team production. They develop an agency model of peer policing to identify factors that affect the extent of mutual monitoring. As the principal must compensate workers for their monitoring efforts and the costs that peer pressure imposes on workers, introducing peer pressure alters the optimal compensation package. The authors establish conditions under which the principal reduces the marginal compensation rule to reduce monitoring efforts. As such, peer pressure provides a rationale for a reduced link between compensation and output in a team setting. Copyright 1997 by University of Chicago Press.

Date: 1997
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (109)

Downloads: (external link)
http://dx.doi.org/10.1086/209832 full text (application/pdf)
Access to full text is restricted to subscribers. See http://www.journals.uchicago.edu/JOLE for details.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ucp:jlabec:v:15:y:1997:i:2:p:234-54

Access Statistics for this article

More articles in Journal of Labor Economics from University of Chicago Press
Bibliographic data for series maintained by Journals Division ().